Why a New York orthodontist has a half-billion dollar hold on Baltimore

Sarah Wockenfuss

The lot at the corner of West Lexington and North Schroeder streets

The lot at the corner of West Lexington and North Schroeder streets (Sarah Wockenfuss)

Edward Ericson Jr.City Paper

The lot at the corner of West Lexington and North Schroeder streets is empty but for a deteriorating sign announcing a hearing about the consolidation of the building lots.

It has been one year since the first permits were applied for, to consolidate 928-948 W. Lexington with adjacent properties on Schroeder and Amity streets “and construct a five story structure that will contain 86 dwelling units, retail space and 43 off-street parking spaces.”

Half of “Phase 1A” of a long-planned mega-development, the structure was originally slated to have its groundbreaking last fall. But like so many prior deadlines, it came and went without a shovel being turned.

Welcome to the Poppleton Redevelopment play, a half-billion-dollar show of smoke and mirrors whose 10-year run (so far) would be the envy of any Broadway producer—but for the fact that there is nothing on stage.

If production is ever completed, the New York developers stand to earn more than $41 million. But they say they need more help from Baltimore taxpayers—$8.5 million in Tax Increment Financing (TIF)—just to start. Soon, the Baltimore City Council gets to decide whether to buy that ticket.

And it is a New York show, with a cast of characters hailing from the world of dentistry, high fashion, public television, and nonprofit housing finance—with the inevitable retired car dealer rounding out the cast. What is unsure right now is whether it is a drama, a tragedy, or a comedy.

It has elements of all three. Plus a mystery: How did these characters gain control of such a large swath of Baltimore?

The show premiered in 2004, when Baltimore Housing published a Request for Qualifications seeking an experienced developer to turn a 13.8-acre section of Poppleton—the bedraggled neighborhood of run-down rowhomes hemmed by Martin Luther King Jr. Boulevard, and Mulberry, West Baltimore, and Carey streets—into a showplace of urban redevelopment.

Responses came from well-known companies such as Pennrose Development Company and Enterprise Homes, both long experienced in complex, large-scale redevelopment. But the city awarded the deal to La Cité, a young New York company with curious star power: Among its partners is Susan L. Taylor, the editorial director of Essence magazine, then a million-circulation glossy style icon in the African-American community. Coincidentally, the March 2005 issue of Essence featured then-City Council President Sheila Dixon in a flattering profile. Taylor became momentarily ubiquitous in Baltimore political circles, even playing “mistress of ceremonies” to Dixon’s 2007 mayoral inauguration.

“She’s always taken the high road,” Taylor said of Dixon, according to a column by the Sun’s Laura Vozzella. La Cité and the family of CEO Daniel W. Bythewood Sr. invested around $6,000 in various Baltimore political campaigns, dropping $1,000 each on Dixon, the late City Councilman Kenneth Harris, current City Council President Bernard C. “Jack” Young, and $1,750 on Mayor Stephanie Rawlings-Blake, campaign finance records show. (Taylor has maintained contact here, attending the 2014 unveiling of a portrait of Frederick Douglass on the walls of the governor’s mansion in Annapolis, with Martin O’Malley presiding.)

The Poppleton project was grandly ambitious, requiring the city to buy and demolish more than 500 private properties to hand over to the developer, who pledged to build more than 1,600 units of housing and more than 150,000 square feet of retail space.

Much of the housing was supposed to be “market rate”—meaning too expensive for most Baltimoreans. The 20 percent set aside as “affordable” housing was going to cost about what an average Baltimore resident could afford. The set-aside was for those making 50 percent of the “area median” income—or about $40,000 per year—City Councilman Bill Henry recalls being told at a meeting. There would be parks, sun decks, and no provision to house the very poor.

“Theirs was the only proposal that included market rate,” says a city official with knowledge of the deal. “I think that is why they were picked.”

Some observers scratched their heads. Aside from the concern that one-bedroom apartments were unlikely to command the projected $1,500 per month in that neighborhood, and aside from the fact that the city was proposing to move people who had renovated their own homes, many wondered who these La Cité people were.

CEO Daniel Bythewood Sr. is an orthodontist with offices in Garden City and Jamaica, New York. His bio on La Cité’s website stresses his experience at Neptune Capital LLC and Flag Luxury Properties LLC, a hotel builder of some repute. His earlier companies include Wildwood Gaming, Inc. and Jet Routes Unlimited, a riverboat gambling and jet charter service, respectively. He is also something of a socialite, appearing at various galas and charity balls.

Bythewood’s son, Daniel Jr., serves as La Cité’s president. His experience is in the world of nonprofit housing finance, specifically the assembly and sale of Low Income Housing Tax Credits (LIHTC), which now undergird nearly all new low-income housing development in the U.S. LIHTCs offer substantial tax breaks to wealthy people and institutions, and a substantial industry has arisen to administer and promote these as good policy. According to his La Cité bio, Bythewood Jr. worked for the New York Equity Fund, managing “a billion dollar portfolio of projects” under New York City’s “Neighborhood Redevelopment Program (NRP), Neighborhood Entrepreneurs Program (NEP), and the Neighborhood Homes Program (NHP).”

But Bythewood Jr. did not oversee those programs directly, nor did he have anything to do with the actual building program. That job fell to a 6-foot-7 assistant New York City housing commissioner named Wendell Walters, aka “The Big Man,” who extorted at least $600,000 in bribes from building contractors seeking contracts under the city’s affordable housing programs, according to court records and news reports. Walters is cooperating with prosecutors and has not yet been sentenced. Bythewood was too far from that action to even garner mention in the scandal.

La Cité partners Susan Taylor and her husband, Khephra Burns, are each listed as “an investor and partner in Flag Luxury Properties, LLC,” which in turn has built luxury hotels across America. Taylor is “editorial director” at Essence, according to the bio, and the “author of three books, she is a much-sought-after speaker.”

Burns’ “24-year career as an author, editor, television writer and producer, has afforded him opportunities to develop personal and business relationships with movers and shakers in media, business and government, locally, nationally and internationally,” his La Cité bio says. Burns was actually a writer for the powerhouse public television station WNET-Thirteen. City Paper could find no indication that Taylor or Burns had managed any large construction projects ever, anywhere.

La Cité’s final partner is Robert Johnson, “founder and former President of Brockport Ford and Bob Johnson Chevrolet in Greece, NY,” according to his La Cité bio. He sold both dealerships in 2001 “and has since concentrated on investment opportunities primarily within the real estate development industry. An equity partner in Loft 5, LLC, as well as La Cité Development, LLC and 110 West 127th Street, LLC, Bob Johnson brings a lifetime of experience as a businessman and self-made entrepreneur to his current endeavors in the real estate world.”

La Cité’s bonafides as a major developer appear to turn on its relationship to Flag Luxury Properties. The company’s website shows gleaming projects such as the Ritz Carlton Hotels in Miami, but La Cité did not develop or build the Ritz Carlton in Miami. The company claims it was an “equity partner” and “financial consultant” to Flag, which partnered with various other hotel companies and developed the Ritz Carlton in South Beach.

City Paper scoured the internet and the news archives at LexisNexis to find information about La Cité and/or the Bythewoods’ role in this project. We found no information outside of La Cité’s website. We unearthed a 2005 press release announcing The Ritz project’s completion. “Lionstone Group and Flag Luxury Properties Join Forces to Bring New Standard of Hotel Sophistication to Miami Beach,” was its headline. It described the Lowenstein family’s deep involvement in the project (they are the Lionstone Group), as well as Flag Luxury’s background and principals. There is no mention of La Cité, Bythewood, or any related entity.

Further digging in Florida corporate records found a La Cité Construction, but it existed for three years—2007-2010—long after the hotel project was built. (A Florida-based “Neptune Capital, LLC” is also defunct and may not be related to the Bythewoods.)

In short, La Cité appears to be an investor, not a principal and not an active manager of the large hotel developments it claims on its website. They are the guy who knows a guy.

A call to Flag Luxury Properties’ New York office was unreturned. Repeated attempts over two weeks to reach La Cité or its Baltimore lawyer by phone and email bore no fruit.

Baltimore officials have had misgivings about La Cité’s capacity for almost half a decade. In 2012 the city tried to sever its relationship with the company, claiming La Cité had not obtained sufficient financing to close Phase I of the deal. La Cité sued, claiming it was Baltimore Housing that failed to meet its obligation under the land disposition agreement by failing to buy out of properties in the project area. “Poppleton I repeatedly complained to the City about its inordinate delays,” the lawsuit said. “But to no avail.”

Included in the exhibits as proof that the city had in fact not cleared the land for development were photographs taken by Dan Bythewood, including one depicting two street lamps.

Also included, at exhibit 28, is a breakdown in the project’s “soft costs” indicating that La Cite expected to be paid exactly $41,029,411 in “professional fees” for the project, including $12,339,918 upon completion of “Phase I.”

The company won.

Since then there have been announcements. Last April the Urban Design and Architecture Review Panel approved the plan for the corner of North Schroeder and Lexington, a tiny piece of the huge project dubbed Phase 1a. Bythewood told The Sun’s Natalie Sherman that the 2012 legal dispute was “water under the bridge,” and the newspaper published a story under the headline “Poppleton Redevelopment Moves Forward,” citing Bythewood’s estimate that the $61 million initial phase of the project would be under construction by the time the leaves started to turn.

That did not happen.

There was no subsequent news until the initial $8.5 million TIF proposal came before the city’s Board of Finance, where one board member, developer Larry Silverstein, voiced misgivings that even other members did not dispute. “The principal appears to have invested in some real estate, but there is no evidence that Cité had any role as a developer,” Silverstein says. “Apparently principals at Cité have had experience at other firms, but that is hard to qualify given that Cité, as the named developer, is the applicant.”

That the city would be pumping $8.5 million into the first phase of a project in which the developer planned to pay itself more than $12.3 million has gotten little attention so far.

Just over a week ago the finance board passed the TIF proposal—with Silverstein’s abstention—to the City Council. TIFs, which pledge property tax dollars to new developments in order to pay for needed infrastructure, have become controversial. The city has routinely granted them to huge downtown projects that arguably don’t need them while, critics say, starving neighborhood developers out. Stephen Janis of the Real News Network framed his story about the project that way early this month, when a preliminary TIF vote failed.

“To be clear, everyone wants the project to work and go forward,” Silverstein, who voted against the TIF on that first go-round, says. “I am just a little unclear how an orthodontist from Long Island who invests in real estate is going to finance, staff, and implement a multi-tiered income mega project lasting 20 years and costing close to $500 million.”

The now-decade-long delay has done the neighborhood no favors, and stories have appeared from time to time, quoting people living or loitering in the vacant zone who say they wish the city would do something about all the vacant houses and loiterers.

“To be honest with you, they have all these vacant houses up here; they should fix this,” Richard Ritch, a 45-year resident strolling on April 15 down West Lexington Street past the vacant site and its year-old sign, says. “People got nowhere to go. They got all this money downtown and people in City Hall are stealing it. They aren’t using it properly.”

Two blocks north and one block west on Sarah Ann Street, Juanita Shorts is standing on the stoop of the tiny rowhouse she’s rented for the past nine years. “Nothing’s happened yet,” she says “I guess I’ll be here until they move me out.”